The Daily Dish

Today AAF has an event on the “gig economy” and the increasing use of independent contractors, which builds on a recent paper designed to shed light on the magnitude of these labor force developments. For those new to the area, there are three interrelated phenomena: (1) the gig economy – workers with alternative work arrangements, (2) the online gig economy – workers who utilize new technologies, markets and platforms for alternative work arrangements, and (3) the “sharing economy” – goods and services that employ under-utilized assets via online marketplaces or decentralized networks.

Reforming 340B

The 340B drug pricing program requires pharmaceutical manufacturers to provide outpatient medications at steeply discounted prices to certain types of hospitals and health clinics. Intended to provide critical cost savings for hospitals and other entities that provide charitable care for patients without health coverage, eligibility for the largest proportion of entities participating in the program is based on a funding formula that relies on the proportion of Medicare and Medicaid inpatients served by a given hospital. As 340B enters its third decade as part of the federal health funding structure, now is a good time to reevaluate and make sure it is working as intended. This short paper argues that a fundamental change in the formula would better reflect the program’s stated priority.

Medicaid Accounts for 16 Percent of All Health Care Spending in U.S.

In 2014, national spending on health care products and services totaled $3.1 trillion, or $9,695 per person, and accounted for 17.4 percent of our gross domestic product (GDP).  Medicaid enrollment grew by 12.9 percent in 2014, while spending on the program grew by 12 percent (federal and state spending grew 17.7 percent and 3.4 percent, respectively) totaling $503.3 billion and accounting for 16.3 percent of national health expenditures (NHE).   Average spending per beneficiary in Medicaid was 1.4 times greater than spending on individuals with private health insurance.  The chart below provides insight into where that money is going: a large share of the nation’s spending on nursing and retirement care, home health care, and other residential and community-based services are paid for by Medicaid.

Independent Contractors and the Emerging Gig Economy

The rise of the so-called “gig economy” and the increasing use of independent contractors has captured the attention of policymakers. Nontraditional work arrangements are hardly a new development in the American economy, yet there is the perception that smartphone apps and online marketplaces have led to a sharp increase in nontraditional work and even a new class of jobs. The goal of this short paper is to survey the limited available data to shed light on the magnitude of these labor force developments.

Don’t Kill the Independent Contractor

Bill de Blasio’s recent attempt to scuttle Uber’s growth in favor of incumbent taxis and “traffic management” is just the first public foray in the battle against the emerging “gig” economy. At all levels, regulators are planning a barrage of measures aiming to limit independent contractors and elevate the traditional employer-employee relationship. If the de Blasio fiasco has taught policymakers anything, it’s that the gig economy won’t be regulated out of existence.

Paying to Keep At-Risk Patients Healthy

Health plans should be paid to keep patients healthy. That is, when some percentage of patients with a chronic progressive disease may be expected to progress to the next stage of that disease in the course of a year, health plans should be paid if they can keep the percentage of patients progressing significantly below the expected level. Depending on the level of success in preventing disease progression, and the payment required to achieve that level of success, preliminary estimates suggest that annual program savings could range from several hundred million to almost $3 billion from chronic kidney disease alone. This is just the tip of the iceberg, since there are many other chronic progressive conditions that would be amenable to this sort of incentive system. Most important, because the payment for reducing disease progression can be calibrated to be lower than the payment for more severe stages of the diseases, it can be guaranteed that program costs will not increase.  In other words, there is great potential benefit, but no downside risk to the taxpayer.

Paying to Keep At-Risk Patients Healthy

Health plans should be paid to keep patients healthy. That is, when some percentage of patients with a chronic progressive disease may be expected to progress to the next stage of that disease in the course of a year, health plans should be paid if they can keep the percentage of patients progressing significantly below the expected level. Depending on the level of success in preventing disease progression, and the payment required to achieve that level of success, preliminary estimates suggest that annual program savings could range from several hundred million to almost $3 billion from chronic kidney disease alone. This is just the tip of the iceberg, since there are many other chronic progressive conditions that would be amenable to this sort of incentive system. Most important, because the payment for reducing disease progression can be calibrated to be lower than the payment for more severe stages of the diseases, it can be guaranteed that program costs will not increase.  In other words, there is great potential benefit, but no downside risk to the taxpayer.

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